Sesa Goa - March 2013 Results Preview - Motilal Oswal

- Mining operations remain shut: We do not expect any iron ore sales volume from Goa due to mining suspension in the state. We expect SESA's revenue to decline 90% YoY to INR2.7b, from pig iron and met coke sales.

- EBITDA to remain negative: In the absence of revenue from the mining business, we expect EBITDA to remain negative at INR631m. Certain cost reduction measures would lower the EBITDA level losses, which were at INR1.1b in 3QFY13. Adj. PAT is likely to decrease by 8% QoQ to INR4.7b due to lower QoQ PAT from associate Cairn Energy.

- FY14E volumes of 5.5mt at risk; Maintain Buy: We believe that our volume assumption of 5.5m tons is also at risk due to the delay in restarting mining in Goa. We are assuming 3.7m tons and 1.8m tons of iron ore sales from Goa and Karnataka respectively in FY14E. The stock trades at 5.6x FY15E EPS, and an EV of 5.2x FY15E EBITDA. We maintain a Buy based on fundamentals of the merged (not complete yet) entity, Sesa-Sterlite.

Source : Equity Bulls

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